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TMI Blog2022 (2) TMI 1478X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is in the nature of deposit and hence limitation is not attracted as held by Member (Judicial) following the ruling of Hon'ble Karnataka High Court in KVR Construction affirmed by Hon'ble Supreme Court 2018 (14) STR J17. OR Limitation prescribed under section 11B is applicable as held by Member (Technical) in view of the ruling of Hon'ble Supreme Court in Mafatlal Industries Vs. Union of India- 1997 (89) ELT 247." 2. The appellant is engaged in providing 'commercial or industrial construction' services as defined in section 65(25b) of the Finance Act, 1994 the Finance Act. For the services rendered to the MP Government through MP State Co-operative Marketing Federation Ltd., the appellant claims to have paid certain amount under a mistaken notion since service tax was not payable in terms of the exemption notification dated 20.06.2012. The appellant, therefore, filed a refund claim on 10.02.2017 for Rs. 1,60,81,347/- specifically stating therein that as the claim was not for refund of duty or tax, it was not filing the refund claim in form R meant for filing of refunds for duty or tax. 3. The Department, however, issued a notice to the appellant requiring the appellant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground that the amount was deposited under a mistaken notion as there was no liability to pay service tax. 7. To appreciate this issue, it would be pertinent to reproduce the relevant portions of section 11B of the Excise Act, which are as follows:- "11B. Claim for refund of duty and interest, if any, paid on such duty (1) Any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person: PROVIDED that where an application for refund has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enclosed. 7. Grounds of Refund As per Annexure-A 8. Bank Details ICICI Bank Ltd. Hyderabad Branch Account No. -000805005884 RTGS/NEFT/IFSC Code-ICIC0000008 It is requested that the refund claim may please be processed and make the payment to us at the earliest." 10. It would be seen from the aforesaid application that the grounds for refund have been provided in Annexure-A to the application. The relevant portion of the grounds as contained in Annexure A to the application are reproduced below:- "xxxxxxxxxxxxxxxxxxxx We are submitting the claim for refund of the amount of Rs. 1,60,81,347/- which was paid during the period 30-09-2012 to 30-06-2014 due to misunderstanding of the provisions of the Law and the Notification issued by the Government of India. We could not claim refund earlier as there was communication gap among the dealing staff. However, the claim is for the amount was paid where it was not required to be paid for the work executed, As such, the amount paid had no colour of Tax and it does not attract the provisions of Section. 11 B of the Central Excise Act, 1944 made applicable to Service Tax by Section 83 of the Finance Act 1994. In this Connection, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention, learned counsel relied upon the decision of the Division Bench of Karnataka High Court in KVR Construction dismissing the Writ Appeal filed by the Department against the decision of a learned judge of the Karnataka High Court holding that the refund claim filed by KVR Constructions towards the amount deposited by mistake cannot be subjected to the limitation prescribed under section 11B of the Excise Act. The appeal filed by the Department before the Supreme Court to assail aforesaid judgment of the Division Bench of the Karnataka High Court was also dismissed on 11.07.2011. Learned Counsel also made reference to various judgments of the High Courts, including the jurisdictional Telengana High Court, as also to decisions of the Tribunal. Reference to these decisions shall be made at the appropriate stage. Learned counsel further submitted that the appellant is entitled to interest on the refund claim from the date of deposit of the amount till the date it is refunded at the rate of 12 per cent per annum. 13. Shri Pawan Kumar, learned authorized representative appearing for the Department, however, submitted that a claim for refund of any duty/ tax can be processed only und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled beyond the statutory time limit prescribed under section 27 of the Customs Act. Section 27 of the Customs Act is pari materia to section 11B of the Excise Act and provides that any person claiming refund of any duty paid by him may make an application in such form and manner as may be prescribed for such refund before the expiry of one year from the date of payment. The High Court held that the appellant had erroneously paid cess for the period from 15.01.2001 to 19.02.2002 under a mistake of law, since it had paid the cess when in fact no such cess was payable. There was, therefore, no question of processing the claim of refund of such amount in terms of the Customs Act at all because the payment made mistakenly was not under the Customs Act. The High Court also held that in such circumstances the decision of the Supreme Court in Mafatlal Industries Ltd. would not apply. After referring to the provisions of section 27 of the Customs Act, the High Court observed as follows:- 10. There can be no doubt that the above provision applies to a claim for refund of 'any duty' within the meaning of that Act. A word 'duty' has been defined under Section 2(15) of the Act means, 'a duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir provisions being struck down and a refund claim arising on that account. In other words, a claim of this nature is not contemplated by the said enactments and is outside their purview.' 12. The relevant passages of the judgment in Anam Electrical Manufacturing Co. reads as under (E.L.T., p.262-63): 'FORMAT ORDER Pursuant to the directions given in Mafatlal Industries v. Union of India? 1997 (89) E.L.T. 247 (S.C.) = 1996 (9) SCALE 457, the appeals/Special Leave Petitions coming up for disposal shall be disposed of in terms of one or the other of the clauses below: (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx (3) xxx xxx xxx xxx xxx (4) The above rules, however, do not apply in the case of a claim for refund of duty levied and recovered under an unconstitutional provision. In such a case, the period of limitation shall be prescribed in Mafatlal Industries. The duty to allege and prove that the duty has not been passed on to another person, of course, remains even in such a case.' 13. It is clear that in Mafatlal Industries the Hon'ble Supreme Court had only talked of refund of duty payable within the meaning of either the Central Excises and Salt Act, 1944 ('E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court held that the provision under the said Act for refund would apply 'only in a case where money is paid under the Act.' It was observed in para 13 as under (E.L.T., p.254): 'Under Article 113 of the Limitation Act, 1963 the limitation was the period of three years from the date the right to sue accrues. It may be noted that in the instant case under Section 23 of the Act, it was provided that the Commissioner shall, in the prescribed manner refund to a producer or a dealer any sum paid or realised in excess of the sum due from him under this Act either by cash or, at the option of the producer or dealer, be set off against the sum due from him in respect of any other period. Section 23 applies only in a case where money is paid under the Act. If there is no provision for realisation of the money under the Act, the act of payment was ultra vires, the money had not been paid under the Act. In that view of the matter Section 23 would not apply.' 15. In U.P. Pollution Control Board v. M/s. Kanoria Industrial Limited - 2001 (128) E.L.T. 3 (S.C.) = AIR 2001 SC 787, while negativing an objection to the maintainability of writ petition seeking refund of the cess collected witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances, the period of limitation under Section 27 of the Act would not apply, as explained in Salonah Tea Company Limited. The applications for refund having been made well within the period of three years' after discovery of mistake by the Appellants, are not barred by limitation. Question (a) in para 7 above is accordingly answered in favour of the Appellants. Consequently, the need to answer question (b) does not arise. 17. In that view of the matter, the impugned order dated 22nd May, 2006 passed by the CESTAT, the order dated 26th August, 2004 passed by the Commissioner (Appeals) and order dated 1st April, 2003 passed by the Assistant Commissioner (Refund) are hereby set aside. A direction is issued to the Respondents to refund each of the Appellants the balance amount of the refund as claimed by them along with interest 6% per annum from the date of payment till the actual date of refund. If the refund is not made within a period of four weeks from today and in any event not later than 27th September, 2007, then simple interest at 12% per annum would be payable for the delayed period. (emphasis supplied) 20. The aforesaid judgment of the Delhi High Court in Hind Agro Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision of this Court in Hind Agro Industries Limited v. Commissioner of Customs 2008 (221) E.L.T. 336 (Del). In that decision the Court has discussed the legal position emerging from the decision of the Supreme Court in Mafatlal Industries v. Union of India, 1997 (89) E.L.T. 247 (S.C.)." (emphasis supplied) 21. The Delhi High Court in National Institute of Public Finance and Policy v/s Commissioner of Service Tax Order dated 23.08.2018 in SERTA 13/2018 accepted the view of the assessee that when the amount was never payable as there was no levy at all, the question of denying the refund did not arise and that the general principal of limitation will be applicable from the date of discovery of mistaken payment. 22. In KVR Construction, a similar issue as in the present appeal arose before the Karnataka High Court. The issue was whether the provisions of section 11B of the Excise Act would be applicable when amount had been paid under a mistaken impression that service tax was payable, when in fact it was not required to be paid under a particular Circular. The Karnataka High Court, after placing reliance upon the judgment of the Delhi High Court in Hind Agro Industries a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words, if the respondent had not paid those amounts, the authority could not have demanded the petitioner to make such payment. In other words, authority lacked authority to levy and collect such service tax. In case, the department were to demand such payments, petitioner could have challenged it as unconstitutional and without authority of law. If we look at the converse, we find mere payment of amount, would not authorize the department to regularize such payment. When once the department had no authority to demand service tax from the respondent because of its circular dated 17.09.2004, the payment made by the respondent company would not partake the character of "service tax" liable to be paid by them. Therefore, mere payment made by the respondent will neither validate the nature of payment nor the nature of transaction. In other words, mere payment of amount would not make it a "service tax" payable by them. When once there is lack of authority to demand "service tax" from the respondent company, the department lacks authority to levy and collect such amount. Therefore, it would go beyond their purview to collect such amount. When once there is lack of authority to collect s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Excise Act, the High Court observed as follows:- "18. Having regard to these decisions, we are of the opinion that if the petitioners were not liable to pay 'service tax' on the transaction of the purchase of the constructed area along with goods apart from undivided share of land at all, the payment which was made by the petitioners would not be a payment of service tax at all; that the department also could not have demanded payment of the same from the petitioners; and merely because the petitioners made the payment, it would not partake the character of 'service tax' and the department cannot retain the amount paid by the petitioners which was in fact not payable by them." (emphasis supplied) 27. In Parijat Construction v/s Commissioner of Central Excise, Nashik 2018 (359) E.L.T. 113 (Bom.) the Bombay High Court after placing reliance on its earlier decision in Hindustan Cocoa Products v/s Union of India 1994 (74) E.L.T. 525 and the decision of the Supreme Court in Collector of Central Excise Chandigarh v/s Doaba Co-Operative Sugar Mills 1988 (37) E.L.T. 478 (S.C.) also observed that the limitation prescribed under section 11B of the Excise Act would not be applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty payable within the meaning of either the Central Excises and Salt Act, 1944 or the Customs Act, 1962, as the case may be. It would, therefore, not apply when payments are erroneously made. The Delhi High Court in Hind Agro Industries, for this reason, held that the decision of the Supreme Court Mafatlal Industries Ltd. would not apply to refunds of amount made under a mistaken notion and in this connection the Delhi High Court placed reliance upon the decisions of the Supreme Court in Salona Tea Company Ltd. and U.P. Pollution Control Board; (iii) The decision of the Delhi High Court in Hind Agro Industries was followed by the Karnataka High Court in KVR Construction and the jurisdictional Telangana High Court in Vasudha Bommireddy; (iv) Therefore, refund of an amount deposited under a mistaken notion cannot be denied for the reason that application was filed beyond the time prescribed in section 11B of the Excise Act; and (v) If payment of service tax is exempted under a notification, the Department cannot demand the said amount if it was not deposited. In other words, the Department lacked the authority to levy and collect such service tax. Conversely payment of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 11B of the Excise Act. The Bombay High Court also considered the decisions of the Karnataka High Court in KVR Construction and the decision of the Delhi High Court in Hind Agro Industries but distinguished them by observing that when the provisions of section 11B of the Excise Act are invoked, the same would apply with full force including the rule of limitation. In the instant case, the application filed by the present appellant for refund of the amount would indicate that it was specifically stated that the appellant was not seeking refund of the amount under section 11B of the Excise Act since the amount that was paid had no colour of tax and did not attract the provisions of section 11B of the Excise Act. This apart, the subsequent decision of the Bombay High Court in Parijat Construction, is squarely on the issue involved in this appeal and it holds that the limitation provided in section 11B of the Excise Act would not be applicable if the amount is deposited under a mistake. 33. Learned authorised representative appearing for the Department also placed reliance upon a Larger Bench decision of the Tribunal in Veer Overseas. Two learned Members, in view of the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dura Coats v. CCE, Bangalore reported in 1996 (82) E.L.T. 512, it has been held that the decision of a particular High Court should certainly be followed by all authorities within the territorial jurisdiction of that High Court and that the authorities in another State are not bound to follow the views taken by a particular High Court in the absence of a decision by the jurisdictional High Court with regard to constitutionality of a provisions. The Tribunal has held that since the adjudication of vires of a provision of a statute or Notification is outside the jurisdiction of the Tribunal and the jurisdictional High Court i.e., the High Court having jurisdiction over the authority and the assessee, has not struck down the provision or Notification as ultra vires, the Tribunal has to follow the same and the assessee is entitled to take the stand that he is entitled to the benefit of the particular provision or Notification since the jurisdictional High Court has not struck it down, even though some other High Court may have done so. In case the conflict of decisions among High Courts does not relate to vires of any provision or Notification, it has been held that the Tribunal has to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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